Maryland AG Enforcement over RESPA Title JVs

The Consumer Protection Division of the Maryland Attorney General’s Office recently entered into an Assurance of Discontinuance to settle alleged violations of RESPA Section 8 in connection with a series of joint ventures set up between a title company and various real estate agents.

The Division alleges that the title company set up a series of joint ventures with various real estate agents for the purpose of selling title insurance to mortgage borrowers.  The joint ventures allegedly paid fees to their real estate agent members in exchange for the real estate agents referring customers to the joint ventures to purchase title insurance.  The Division claims that this violated Section 8 of RESPA and the Maryland Real Estate Settlements Act, each of which generally prohibits giving a thing of value in consideration for the referral of customers for the purchase of title insurance.  The conduct also allegedly constituted an unfair and deceptive trade practice under the Maryland Consumer Protection Act.  The respondents denied the allegations and claimed that, among other things, the joint ventures complied with RESPA’s safe harbor provision governing affiliated business arrangements (which is also incorporated into Maryland law).

As part of the settlement, the respondents agreed to pay $850,000 in restitution to affected consumers, as well as a $200,000 administrative penalty. Further, the respondents agreed to dissolve the existing joint ventures and not to commit similar violations in the future.